Bracing for Cuts, Federations Hold Tongue on Taxes

Jewish federation leaders are bracing for substantial cuts in government funding for the social services their agencies provide as attention turns toward deficit reduction following the presidential election.

Just how much will depend on the outcome of the post-election debate now unfolding on President Obama’s proposal to increase tax rates on the wealthy to help close the federal deficit.

But discussions with federation officials in the hallways and conference rooms at the General Assembly of the Jewish Federations of North America here from November 11 through November 13 indicated that this is a debate in which the federations will take no part, despite its impact on their missions.

“From a reality and a practical point of view, it looks like there will be some cuts,” said Jewish Federations of North America president and CEO Jerry Silverman. Silverman declined to state JFNA’s position on a tradeoff that would include tax hikes in return for limiting budget cuts.

Instead, said Silverman, whose group is the umbrella organization for 155 Jewish federations in the United States and Canada, the Jewish community is focused on “trying to mitigate at least the amount of cuts” to social services. Federations are the largest providers of social services to the Jewish community and administer $10 billion in federal funds through Medicaid and Medicare. Federations also are reliant on other federal programs helping the needy within Jewish communities, including Supplemental Nutrition Assistance Programs (formerly known as food stamps), urban and communal block grants and other housing programs, as well as Department of Homeland Security funds for protection of Jewish institutions.

As the Obama administration begins talks with Congress on a package to avoid the “fiscal cliff” — a set of budget cuts and tax hikes scheduled to kick in at the end of December — Jewish leaders are aware of the fact that any such deal would include some cutbacks in government services. To the extent they could, federations, many of whose revenues have taken a hit in the great recession, would have to dig even deeper into their pockets in order to mitigate the shortfall.

Historically, the federation system has been reluctant to take on tax issues or other key fiscal legislation due to built-in tensions between the federation-affiliated service providers and key donors who oppose tax increases on themselves and on their businesses.

In 2002, after the Bush administration and Congress approved legislation cutting marginal taxes for 10 years, the Jewish Council for Public Affairs, a policy organization affiliated with the JFNA, passed a resolution calling on lawmakers to let the cuts expire when that period ended. This would return tax levels to the higher marginal rates in force during the Clinton administration. Under heavy pressure from major donors, JCPA did not repeat the call and has since refrained from making any public statements regarding tax policy.

Similarly, the federation system sat out the debate over Obama’s Affordable Care Act and did not provide lawmakers and communal leaders with a clear view of the Jewish federation system’s opinion on health care reform as a whole, despite the fact that universal health care had been a key issue for local community relations councils for decades.

In July 2011, when federation officials met on Capitol Hill with a group of Democratic senators during last year’s fight over tax and budget cuts, the senators complained angrily when the federation leaders pleaded with them to protect social services. According to JTA, Senators Carl Levin of Michigan and Ben Cardin of Maryland — both Jews with deep personal roots in their home communities — urged JFNA board chair Kathy Manning to help them help JFNA by lobbying against an across-the-board extension of the tax cuts that were about to expire. Continuation of the tax cuts, they explained, would require deeper cuts in government social service spending to make up for the lost revenue. But federation officials declined to take a stand.

In the current discussion, federations are taking on only one relatively small tax issue: a proposal to put a cap on charitable and other tax deductions. Federation officials fear this will lead federation donors to decrease their giving. “This is our big red line,” said William Daroff, JFNA’s vice president for public policy. Daroff added that JFNA recognizes “that there will be cuts” to services but said the group’s advocacy staff has already began talks with White House and Congress staffers to ensure that any such measures “should not disproportionately fall on vulnerable populations.”

JFNA’s annual Jewish Community Budget Letter, which presents lawmakers with the community’s reactions to budget proposals, is currently in preparation. In recent years, the letter focused on the need to maintain foreign aid to Israel, keep charitable tax deductions in place and avoid cuts to social services.

“It is a shame they are only willing to talk about the money-outside and not about revenue and justice of the tax system,” said Hadar Susskind, director of Bend the Arc Jewish Action, a progressive Jewish organization.

But others in the Jewish community see no need to dive into the political dispute surrounding revenue sources even as they advocate for increased social services.

“My feeling is that the Jewish community should focus on the ability to provide service in an effective way,” said William Rapfogel, CEO of Metropolitan Council on Jewish Poverty. “I don’t think we need to be in the other discussion.”

Details of social service cuts are still unknown, but the federation system has stated its support for a compromise — albeit without endorsing tax increases as a means to cut the national deficit. “JFNA wants to be part of crafting a middle-ground approach, and, to the extent that this is a bipartisan solution that recognizes tradeoffs, we want to be part of it,” said Daroff.

Steering clear of political disputes was the order of the day at the G.A., which, despite proximity to the presidential election, hardly discussed political issues. In one session in which the impact of election results on the Jewish community was debated, the concerns of participants focused more on President Obama’s policy toward Israel in his second term than on the economic and social issues that were central to the campaigns.

Still, the JFNA did try to convey its commitment to social justice by making a call for tikkun olam, Hebrew for “repairing the world” — or social justice — a centerpiece of the gathering. Organizers set up a special discussion track devoted to examining ways of engaging the Jewish community in helping developing countries. Other forums discussed programs devoted to helping the vulnerable in society.

Communal leaders described the tikkun olam as a concept that was as important for building Jewish identity as it was a way to help those in need. “This could be the biggest doorway for young people to be Jewish,” Rabbi Rick Jacobs, president of the Union of Reform Judaism, told the Forward. In surveys, he noted, seven in ten Jewish Americans say their sense of Jewish identity is built on the core call of repairing the world.

Jacobs, who was this year’s scholar-in-residence at the G.A., delivered a passionate speech at the opening plenary, in which he described tikkun olam as the solution to the problem of declining interest among the younger generation of American Jews in communal involvement. “Against a secular culture that places each individual at the center of the universe, young Jews want to find a way to connect beyond themselves,” he told the crowd of 3,000.

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Nathan Guttman staff writer, is the Forward’s Washington bureau chief. He joined the staff in 2006 after serving for five years as Washington correspondent for the Israeli dailies Ha’aretz and The Jerusalem Post. In Israel, he was the features editor for Ha’aretz and chief editor of Channel 1 TV evening news. He was born in Canada and grew up in Israel. He is a graduate of the Hebrew University of Jerusalem. Contact Nathan at guttman@forward.com, or follow him on Twitter @nathanguttman

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